Sending AB application to the wrong insurer a "reasonable explanation" for a delay in reporting the claim to the proper insurer: arbitrator

An Ontario arbitrator has awarded a $5,000 ‘special award’ against Economical Mutual Insurance Company after the company denied a claim on the basis that the claimant, Roda Egal, had not provided a reason for a delay in making her application following her injury in a motor vehicle accident. Four months after the accident, Egal’s lawyer had provided Economical a reason for the delay — confusion, basically. Approximately three months after her injury, the claimant applied for benefits to the wrong insurer, the American Home Assurance Company, which had approved her treatment plan and began to pay accident benefits. Economical subsequently took two years to obtain Egal’s file from the firm adjusting the claim. The claimant was injured on Apr. 29, 2009, while travelling with two friends in a rental vehicle that was struck on the passenger side (Egal was sitting in the front seat). She was taken by ambulance to a Toronto hospital, where she left before receiving treatment, and was bed-ridden for six days. Egal testified she was away from work for approximately two weeks after the accident, since she could not turn her neck left or right, her chest hurt and she had back pain, knee pain and headaches. She saw a chiropractor every day until the summer of 2010. Egal originally sent her application for accident benefits in error to American Home Assurance. An adjuster from Crawford Adjusters Canada Inc. was assigned to the file. An Ontario arbitrator has awarded a $5,000 ‘special award’ against Economical Mutual Insurance Company after the company denied a claim on the basis that the claimant, Roda Egal, had not provided a reason for a delay in making her application following her injury in a motor vehicle accident. Four months after the accident, Egal’s lawyer had provided Economical a reason for the delay — confusion, basically. Approximately three months after her injury, the claimant applied for benefits to the wrong insurer, the American Home Assurance Company, which had approved her treatment plan and began to pay accident benefits. Economical subsequently took two years to obtain Egal’s file from the firm adjusting the claim. The claimant was injured on Apr. 29, 2009, while travelling with two friends in a rental vehicle that was struck on the passenger side (Egal was sitting in the front seat). She was taken by ambulance to a Toronto hospital, where she left before receiving treatment, and was bed-ridden for six days. Egal testified she was away from work for approximately two weeks after the accident, since she could not turn her neck left or right, her chest hurt and she had back pain, knee pain and headaches. She saw a chiropractor every day until the summer of 2010. Egal originally sent her application for accident benefits in error to American Home Assurance. An adjuster from Crawford Adjusters Canada Inc. was assigned to the file. In separate correspondence dated Aug. 11 and June 8, 2009, the adjuster acknowledged receipt of Egal’s application and treatment plan, which American Assurance approved in full. In late August 2009, counsel for Egal forwarded correspondence to Economical with an application for accident benefits and an authorization and direction. On Sept. 2 and 18, Economical requested the reason for Egal’s delay in reporting the claim. “On Sept. 28, 2009, Ms. Egal’s counsel forwarded an explanation for the delay to Economical stating that Economical failed in explaining Ms. Egal’s rights to her and did not provide her with an accident benefits package,” the arbitrator noted. “Therefore, her application was not forwarded until after she retained counsel.” Economical said it did not deal with Egal’s claims because of time that had elapsed between the accident and her application. Ontario accident benefits legislation requires that applicants for related benefits must notify their insurers within seven days of the accident, “or as soon as practicable afterwards.” The saving provision in the legislation is that a person is not disentitled from proceeding with a claim if the applicant has a reasonable explanation. “I find no merit in Economical’s position that it had no responsibility to adjust Ms. Egal’s file until receiving a reasonable explanation for her delay in applying,” the arbitrator ruled. “Economical received a reasonable explanation for the delay. Economical was also aware that documentation had been sent to the wrong insurer and persisted in refusing Ms. Egal’s claims long before it had received her file. “I find that Economical failed egregiously in its responsibilities to its first party insured, Ms. Egal. It did not follow up expeditiously in obtaining her file from American Assurance and it made decisions about her entitlement in its absence.”

Ontario court awards punitive damages against insurer, distinguishing between fraud and maximizing insurance recovery

Wawanesa Mutual Insurance Company employed a high-stakes litigation strategy designed to intimidate homeowners seeking damages, a choice that demands significant, but proportionate punishment, an Ontario court has ruled. In Brandiferri v. Wawanesa Mutual Insurance, et al., Ontario Superior Court Justice P.D. Lauwers dismissed the insurer’s allegations of fraud against the policyholders in a decision related to a fire at the home of Salvatore and Linda Brandiferri on Aug. 8, 2000. The fire destroyed the home’s contents and resulted in smoke penetrating the house. The Brandiferris sued Wawanesa and Strone Construction, arguing the latter is liable for deficient remedial construction work and the insurer was also liable because it selected the contractor that provided the poor work. The homeowner’s insurance policy provided “guaranteed replacement cost” coverage for the house and contents, and included a “single inclusive limit” of $564.000. Wawanesa paid slightly more than $479,000, but the Brandiferris sought $178,093.74 from Wawanesa and Strone for the house not being completely or acceptably restored. Counsel for Wawanesa submitted that the Brandiferris had brought an action without determining the amount at issue by way of appraisal. Pina Naccarato, the Brandiferris’ daughter, prepared the proofs of loss. Once completed, they were submitted to the Bradiferris’ lawyer. The proofs of loss prepared on the Brandiferris’ behalf were completed by someone who had never done these before and had no instructions on how to do so, the court determined. The court notes that everything in the house — which had earlier been taken away — was included on the list. Naccarato did not know which items were damaged. “By swearing the proof of loss, the Brandiferris swear that the items listed were destroyed in the fire,” counsel for Wawanesa submitted. As such, those statements were false. “They were not claiming these items in the context of an honest claim for indemnity, but rather in an attempt to secure the maximum payout from the policy and turn this fire as a source of gain.” Justice Lauwers notes the law in Ontario is that it is not automatically fraud for a plaintiff to put in a claim that might be seen as exaggerated. “I am not persuaded on the evidence that the Brandiferris committed fraud in preparing and filing the first or subsequent proofs of loss, even though they did seek to maximize their recovery.” Justice Lauwers determined that, in light of correspondence, it was plain that Wawanesa, through its counsel, “waived its right to insist on an appraisal, in writing, and therefore cannot now insist that it is a condition precedent to the plaintiffs’ right to recovery in this action.” The decision further notes: “The fraud allegation was late-breaking and was only made after the action was started in the statement of defence and counterclaim." Part of an insurer’s duty of utmost good faith in investigating, assessing and attempting to resolve claims must attach to the insurer’s litigation strategy against the insured when the claims is disputed, the ruling adds. Justice Lauwers calculated $108,257.78 as the amount needed to put the home in the condition it was before the fire. He ordered Wawanesa to pay $100,000 in punitive damages.

Family of Quebec man killed when a tree fell on his car should go to province's auto insurer for compensation: Supreme Court

A Quebec man killed when a tree fell on the vehicle he was driving in the City of Westmount must turn to the province’s auto insurer for compensation, the Supreme Court of Canada has ruled, thus rejecting the man’s civil lawsuit against the city. In August 2006, a tree in the City of Westmount fell on a vehicle occupied by Gabriel Anthony Rossy, killing him. His family sued the city for damages, alleging that the city, as the owner of the tree, had failed to properly maintain it. The city sought to dismiss the lawsuit, arguing that the injury resulted from an accident caused by an automobile. Therefore, any compensation should come from the no-fault benefits scheme administered by the Société de l’assurance automobile du Québec under the province’s Insurance Act. The province’s no-fault insurance scheme applies to any accidents in which injury or damage was “caused by an automobile, by the use thereof or by the load carried in or on an automobile.” The Supreme Court agreed with the city’s position. “Although the vehicle may have been stationary or moving through an intersection, the evidence on the record is that [Rossy] was using the vehicle as a means of transportation when the accident occurred,” the Supreme Court ruled, thus overturning the outcome in the Quebec Court of Appeal. “This is enough to find that the damage arose as a result of an ‘accident’ within the meaning of the act and that the nofault benefits of the scheme are triggered. Therefore, the civil claim is barred and [Rossy’s] parents and brothers must turn instead to the Société de l’assurance automobile du Québec for compensation.” Elsewhere, the court wrote: “The vehicle’s role in the accident need not be an active one. The mere use or operation of the vehicle, as a vehicle, will be sufficient for the act to apply.”

Insurers have "no choice" but to tap into social media: Accenture

The issue is not if, but how, insurers should leap into the world of social media, a new report from Accenture has concluded. “Insurers, of course, really have no choice about participating in social media,” the consulting firm noted in its study, Insurers and Social Media: Vast Potential, Significant Challenges. “With people engaged in social media all around them, the real question is how to participate.” It found the financial services industry as a whole has not generated significant social media “engagement,” although 28 insurers listed in the Fortune 500 have established Facebook pages and 20 have Twitter accounts. “Insurers are only now beginning to explore the real potential of integrated social media campaigns,” according to Accenture. The consulting firm illustrated three distinct stages for social media awareness amongst insurers: • Listen: conduct social media monitoring and analysis. • Engage: initiate marketing campaigns and customer interaction. • Optimize: link social media to customer relationship management (CRM) and building a “single view” of the customer. Accenture observed that insurers succeeding in social media will “build engagement and generate customer interest at much higher levels than many other industries. . . . “However, many insurers will need to re-examine their current IT infrastructure — particularly legacy policy administration systems — to make sure that the capabilities are in place to support (social media) initiatives at scale.”

Lawyers resign from Ontario auto insurance committee

Several lawyers are protesting recently announced changes to the definition of catastrophic injury for accident victims by quitting an auto insurance committee created by the Financial Services Commission of Ontario (FSCO). The Toronto Star reported the group of personal injury lawyers, who include Richard Halpern, partner at Thomson Rogers, Roger Oatley of Oatley Vigmond Personal Injury Lawyers LLP, Nigel Gilby, partner at Lerners LLP and Stephen Firestone of Lackman Firestone, resigned because their recommendations on catastrophic impairment were ignored. “The Ontario government is looking at narrowing the definition of catastrophic impairment,” Halpern told the Star. “This will in turn deprive many seriously injured victims of the support they reasonably need and expected from the protection they thought they were buying with their auto premium dollars.” The insurance industry “is always trying to get governments to roll back the rights of accident victims,” added Oatley. “The government will now claim they consulted with stakeholders, including lawyers and consumers. “We were invited because of our expertise, but ignored. We resigned because the process was a sham. Can you imagine, for example, that in this day and age, emotional injury has to be ignored when assessing the impact of an injury – even though our highest court recently said it should be taken into account?” The informal legal committee was established by FSCO Superintendent Philip Howell to seek advice on auto insurance. On June 12, the Ontario regulator made its recommendations to the provincial finance minister on rules for determining catastrophic impairment. FSCO supported the findings of an expert medical panel in its proposals, including not combining physical impairments with psychiatric or mental/behavioural factors for catastrophic injury, an interim status for claimants who require intensive and prolonged rehabilitation to receive immediate treatment and the use of several clinical and diagnostic tools in determining catastrophic impairment.

Big Data represents big challenge for insurance industry: study

The growth of unstructured, disparate information will create problems for insurance companies that don’t have the technology infrastructure or tools to handle it, according to a recent report from consulting firm Novarica. ‘Big Data,’ defined as data sets that are too large or complex to work with using traditional database systems, could create a broad “analytics” gap between large and midsize insurers, noted Matthew Josefowicz, Novarica’s managing director, partner and co-author of the study, Analytics and Big Data at Insurers: Current State and Expectations. “While data analysis has always been at the core of the insurance industry, legacy technology environments and business practices have inhibited the embrace of Big Data by insurers,” Josefowicz stated. “But the hype around Big Data has renewed focus on little data — traditional enterprise data and analytics — which is still an area of underinvestment for many insurers, especially midsize insurers.” In a survey of 86 insurers, 15% to 20% said they are preparing their technology infrastructure for Big Data projects. Josefowicz noted that adoption rate of technology around Big Data was “tepid” in the insurance industry and lags behind other sectors of the economy. “When it comes to Big Data areas like geospatial data, Internet clickstreams, audio data, social media content, mobile data, telematics, video data and others, usage rates are still very low,” Josefowicz commented. “And while few insurers have invested in the specialized infrastructure required to manage Big Data, a sizeable minority are planning to do so within 12 months.”

Global study shows consumer support for bank branches offering insurance

A new study from Cisco indicates 65% of respondents globally would favour bank branches offering an expanded portfolio of financial and advisory services, including insurance. The Cisco Internet Business Solutions Group (IBSG) Omnichannel Study: Winning Strategies for Omni-Channel Banking surveyed 5,300 consumers in both developed and emerging countries, including Canada, France, Germany, United States, United Kingdom, Brazil, China and Mexico. The suggestion to have bank branches offer an expanded portfolio — including financial education, legal accounting, tax and insurance — had more appeal in emerging countries than in developed countries. The expansion was supported by 56% in developed countries and 81% in emerging countries. Overall, the Cisco statement notes, “the study shows consumers want banks to deliver financial advice and banking services through both virtual and physical channels, ushering in a new era of omnichannel banking.”